Home/ Questions/Ms Sade is a trader operating under the name of 'SA Traders'.
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Asked: 2022-04-13T03:59:40+00:00 In:

Ms Sade is a trader operating under the name of ‘SA Traders’.

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Ms%20Sade%20is%20a%20trader%20operating%20under%20the%20name%20of%20'SA%20Traders'.%20She%20informs%20you%20that...

Ms Sade is a trader operating under the name of ‘SA Traders’. She informs you that she consistently adds 33% to the cost of all goods which she sells in order to arrive at selling prices. She presents you with the following financial statements for the years ended 31 March 2000 and 2001.

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⋅ No fixed assets were sold during this year.
⋅ Additional furniture costing R5 000 was purchased 1 April 2000.
⋅ The motor vehicles were purchased on 1 April 2000.
The loan of R100 000 which bears interest at the rate of 5% p.a. payable in arrear was obtained on 1 April 2000.
Required
A cash flow statement for the year ended 31 March 2001.                                      [20]

♦ Relevant knowledge

A loan is money that you get from a family member, friend member, or financial institution, with the agreement to repay the principal amount, plus interest over time. A loan that is good can be which is used for investing or to expand the scope of a company. To avoid falling into bad debt, it’s best to pay back the loan in accordance with the conditions and terms set by the individual who provided the credit.
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2 Answers

  1. Best Answer
    Expert
    Indirect Method
    Cash Flow from Operating Activities
    Net Income $ 18,480
    Adjustments
    Depreciation $ 2,750
    Changes in current assets/current liabilities
    Increase in Debtors $ -44,600 =43130-87730
    Stocks increase $ -39,900 =50000-89900
    Creditors are declining $ -24,030 =10970-35000
    Increase in the amount of bills payable $ 25,050 =62550-37500
    Total Adjustments $ -80,730
    Cash from Operating Activities                   -62,250
    Cash flow from Investing Activities
    Furniture Purchase $ -5,000
    Purchase of motor vehicles $ -35,000
    Net cash used In investing activities                  -40,000
    Cash flow from Financing Activities
    Capital introduced $ 55,000
    Lending Institution $ 100,000
    Drawings $ -25,500
    Net cash used in financing activities                129,500
    Increase in Cash    27,250
    Open Balance of Cash $ -10,500 =1500-12000
    Closing Balance $ 16,750

    As part of your initial cash, you can consider a Bank Overdraft.

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  2. Direct Method
    Cash Flow from Operating Activities
    Net Income $ 18,480
    Adjustments
    Depreciation $ 2,750
    Changes in current assets/current liabilities
    Increase in Debtors $ -44,600 =43130-87730
    Stocks increase $ -39,900 =50000-89900
    Creditors are declining $ -24,030 =10970-35000
    Increase in the amount of bills payable $ 25,050 =62550-37500
    Total Adjustments $ -80,730
    Cash from Operating Activities $strongTag2$nbsp;       
    -62,250
    Cash flow from Investing Activities
    Furniture Purchase $ -5,000
    Purchase of motor vehicles $ -35,000
    Net cash used In investing activities $strongTag5$nbsp;       
    -40,000
    Cash flow from Financing Activities
    Capital introduced $ 55,000
    Lending Institution $ 100,000
    Drawings $ -25,500
    Net cash used in financing activities $strongTag8$nbsp;       
    129,500
    Increase in Cash $strongTag10$nbsp;         
    27,250
    Open Balance of Cash $ -10,500 =1500-12000
    Closing Balance $ 16,750

    As part of your initial cash, you can consider a Bank Overdraft.

    • 21

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